Choose Actuary as a Career
Actuary is a business professional who deals with the financial impact of risk and uncertainty. I first came across this word in the 1st year of my undergraduate course. One my faculty said the profession was very sought after and the repute associated was great. However the fact that the number of exams to be passed were 15 dampened the enthusiasm. Giving 15 exams along with usual college studies seemed too much pressure for me.
This profession again came into my thought during my MBA course at Christ University. During one of our corporate interface Mr. L. K. Lakshminarayan, the Chief Endowment Officer, Azim Premji Foundation talked about the job profile of an actuary. Only a person with a strong base and a nerve of steel can endure the high pressure that the job demanded. The fact that there is a low success rate and the high number of tests shows that only the creme de la creme get through.
In definite terms we can say that an actuary provides an expert assessment of financial security systems. They evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses both emotional and financial. This may sound a bit like a fortune teller but instead of a crystal ball the actuary uses mathematical models and base knowledge of statistics, economics and finance. This helps in the decision making process and makes the process standard and with little chance of error.
The various scope of work for an actuary may be as follows
1.Health and Care Insurance
4.Pensions & Other Employee Benefits
7.Enterprise Risk Management (ERM)
2.Life Insurance
5.Finance
8.Academics
3.General Insurance (non-life or P&C)
6.Investment
9.Regulatory
For instance take car insurance, an actuary has the job to take all aspects of the car into consideration while deciding the price for the insurance from the current life of car, type of engine to type of usage to which it may be subject to. After taking all these factors into account the actuary needs to find out fit the appropriate insurance price for the vehicle.
Similarly in the scope of finance an actuary’s knowledge is of great importance for finding out the valuation of a company which is going to be taken over or be merged.
But to become an actuary one needs to go become a certified member of one of the recognized actuarial bodies :-
Institute Of Actuaries Of India (IAI)
Institute and Faculty of Actuaries(IOA), UK
Institute of Actuaries of Australia
Society of Actuaries, US
Casualty Actuarial Society, US
Some of these actuarial bodies have mutual understanding. For example an actuary recognised by the IAI is also recognised by the IOA and vice-versa.
The Indian arm IAI also recognises certain international courses. For instance a student of Indian Statistical Institute has 2 out of 15 papers waivered. Similarly a student who has passed Chartered Financial Analyst (CFA) or Financial Risk Management (FRM) course also gets some papers exemption.
All the papers are subjective in nature and need lot of work from the evaluator’s point of view. To ease the pressure off the number of evaluators and make the pool of people giving actuary a refined lot an entrance exam was introduced from June 2012. Now one needs to pass this entrance exam to be able to give any of the subjective papers. This entrance exam Actuarial Common Entrance Test (ACET) is a computer based test containing 100 questions from different topics of Mathematics and Statistics.
So if one thinks that one has the uncanny talent for quick calculations and an inherent knowledge of statistical terms one can try or prove his or her mettle in this field of actuarial profession. However if one is not convinced of whether the hard work required is worth anything – one can look at this as a silver lining, ₹1.25 million. This is the approximate starting salary of an actuary!
According to Thomas Edison Genius is 1% inspiration and 99% perspiration. So if you think you have what it takes to become an actuary start working hard.
Author Bio: Gaurav Trivedi, student of MBA-Finance at Christ university institute of management, Bangalore has cleared actuarial entrance test and aspiring to have actuary as a profession.